Use the national income data in the table below, compute (a) GDP, (b) NDP, and (
ID: 1220629 • Letter: U
Question
Use the national income data in the table below, compute (a) GDP, (b) NDP, and (c) NI.
National Income Accounting Data
Amount (billions)
Compensation of Employees
$223
Net U.S. Exports of goods and services
11
Consumption of fixed capital
27
Government purchases
72
Taxes on production and imports
18
Net private domestic investment
33
Transfer payments
12
U.S. imports of goods and services
33.0
Personal Taxes
81
Net foreign factor income
4
Personal consumption expenditures
245
Statistical discrepancy
8
Compare a $60,000 median family income in 1980 to the same income in 1990, 2000, and 2010. What are the differences in the available products? What are the differences in the quality of those products? Considering this, in which of those years would you rather live? Why?
National Income Accounting Data
Amount (billions)
Compensation of Employees
$223
Net U.S. Exports of goods and services
11
Consumption of fixed capital
27
Government purchases
72
Taxes on production and imports
18
Net private domestic investment
33
Transfer payments
12
U.S. imports of goods and services
33.0
Personal Taxes
81
Net foreign factor income
4
Personal consumption expenditures
245
Statistical discrepancy
8
Explanation / Answer
(1)
(a) GDP ($ Billion) = Personal consumption expenditures + Net private domestic investment + Consumption of fixed capital + Government purchases + Net U.S. Exports of goods and services
= 245 + 33 + 27 + 72 + 11
= 388
(b) NDP ($ Billion) = GDP - Consumption of fixed capital (Depreciation)
= 388 - 27
= 361
(c) NI ($ billion) = NDP + Net foreign factor income
= 361 + 4
= 365
Note: First question is answered.
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